When a firm is in startup mode, the owner often has a vision on what they want that business to looks like in the future. It doesn’t mean that that vision won’t change as time goes on. But there is a vision short and long-term in their heads. Those visions pushes us forwards, even on very challenging days, weeks and months.
An advisor might prefer to be stay a solo business, become a partnership, grow to a small business, or scale to a much larger visible firm — or somewhere in between.
The main goal of a start up is to take what they know, serve as many clients as possible, and to be profitable.
Growth is about increasing resources at the same time you’re adding revenue. You’re gaining clients and increasing revenue. You grow your firm (profit) and the costs increase because you’re growing your team (people), processes and technology. Profit increases slowly because you’re putting money back into the company to pay for the increased resources.
Example: As a service-based business with an increasing flow of new clients, will hire more people/vendors, and create systems to upgrade customer service and make training new employees easier. They’ll bring on more technology to service clients and their operation.
Scaling is about adding revenue over time while adding or changing few resources. You increase your margin at a rapid rate over a short period of time by adding clients. You’re able to scale because you and your teams have increased their productivity and efficiency.
Example: You’ve brought on new clients, and your current team can easily take care of these clients. Spending often happens in the areas of upgrading what they have to make the operations flow more smoothly and providing training for the owner and the team.
Where do you see your business now? Start-up? Growth? Scaling?